Bridging Loans
Funding That Fits Your Needs!
What Can You Use a Bridging Loan For?
Bridging loans are versatile and can be used for a variety of purposes, especially for property developers, investors, and landlords. They’re particularly useful when you need to secure a new property before your current one has sold, or when securing a commercial mortgage is taking longer than expected. Bridging finance can provide the funds you need to make an offer on your next property.
You could use a commercial bridging loan for:
- Buying properties at auction
- Funding property development, refurbishment, or conversion
- Purchasing commercial or semi-commercial properties
- Investment purchases, such as buy-to-let properties
- Buying properties in inhabitable condition
- Purchasing HMOs (Houses in Multiple Occupation)
- Property refinancing
- Land purchase
Did You Know? For a loan to be classified as ‘commercial,’ at least 40% of the property or land being purchased must be used for commercial purposes. For instance, if you're buying a retail shop, restaurant, or office with a residential flat above, the commercial portion of the property must represent more than 40% of its total value.
Important Reminder: Think carefully before securing debts against your commercial property. Failure to meet repayment terms could result in the repossession of your property.
Flexible Financing for Growing Businesses
Find the Right Financial Support
How Does Bridging Finance Work?
A bridging loan for business is a secured loan, meaning you'll need a valuable asset to secure the funding. Unlike other forms of finance, bridging loans aren’t repaid in monthly instalments. Instead, the lender is paid back when you sell your property or secure alternative funding, such as a long-term mortgage.
Bridging Loan Example
- A property developer wants to purchase a property worth £150,000 to renovate and sell.
- They have £50,000 available to contribute towards the purchase.
- They need an additional £100,000 to cover the gap.
- A bridging loan is used to provide the £100,000 needed to complete the transaction.
- The loan is repaid once the property is sold or the developer secures long-term funding.
